Offered a Settlement Agreement? Not sure what to do?

I have helped numerous clients with their Settlement Agreements (previously known as a Compromise Agreements) over the years. Every client has a different reaction or goes through a different process when they have been offered a Settlement Agreement by their employer. The first question I am asked is usually, “what is a Settlement Agreement?”. The second question is “Do I have to sign?”. I will try to answer those questions in this blog.

What is a Settlement Agreement?

A Settlement Agreement is a contract between an employer and an employee which, usually, sets out terms for the employee to give up their job, their employment rights and any Employment Tribunal claims they may have in exchange for a compensatory payment from their employer.

Settlement Agreements are offered by employers for many different reasons; and accepted by employees for many reasons more. Sometimes the offer is as a result of a dispute, sometimes it is to speed up a restructure of the company, sometimes it is an amicable parting of the ways. Whatever the reason, you need to make sure you are making the right decision for you. To do this, you need your solicitor to fully explain and discuss the Settlement Agreement with you.

Do I have to sign my Settlement Agreement?

Whether you sign a Settlement Agreement is your choice. Obviously, every client’s circumstances are unique, but a game of “what if you don’t sign?” usually helps to clarify your options. I have had clients who thought they had to sign, but when we talked through the background together their situation was not as they believed. You can only make an informed decision if you know all your options.

Should I sign my Settlement Agreement?

Make sure you are actually getting some compensation for giving up your job and all your employment rights. When discussing the compensation payment, the first part of the process is to identify what payments you would be entitled to in any event. I look at notice, holiday, bonuses, long service awards, car allowance, pension contributions, redundancy payments etc. To be blunt, there is no need for you to sign and subject yourself to all sorts of waivers and obligations, if you are simply receiving the payments you are already entitled to.

If I sign the Settlement Agreement, what will I have to do?

Make sure you understand what your obligations are under the terms Settlement Agreement. Usually you will be giving up your employment and waiving and settling your employment rights and claims as you would expect. However, all sorts of additional requirements and indemnities sneak in to these types of contracts. Again, whether you sign the Settlement Agreement is your decision, but a decision you can only make if you are fully aware of your obligations.

If I sign the Settlement Agreement, what will my employer have to do?

In most circumstances, your employer will have to make a compensation payment to you by a certain date. However, you should also think about any provisions you might want in the Settlement Agreement. Clients are often surprised that they negotiate for terms they want in the contract. I will often discuss with clients any restrictive covenants in their Contract of Employment and we will seek to have them released from those obligations as part of the Settlement Agreement. Sometimes we will discuss including references; health insurance; buying their company car; keeping tablets or laptops; keeping mobile phone numbers; in fact, anything which is important to the client. The Settlement Agreement is an important document and often the terms of the agreement itself are the only chance to include the provisions you want.

We can help

I fully appreciate that signing a Settlement Agreement will always be an important and personal decision for my clients. Anyone considering a Settlement Agreement should ensure they have as much information as possible. This can be a life-changing decision, but whether that change is for the good or otherwise, playing “what if” after you sign is simply too late.

If you have been offered a Settlement Agreement and are looking for the right solicitor to help you, give me a call on 01522 539501 for a free, no obligation consultation. For more information about LincsLaw Solicitors, including who we are and what we do, please visit our website at www.lincslaw.co.uk.

Sally Hubbard

Sally is a Lincolnshire girl through and through and has lived in Lincoln her whole life (apart from a brief spell when she went to university in Nottingham, but we don’t talk about that). She began her career with Lincolnshire County Council qualifying as a solicitor in 1996, which she believes now makes her "vintage".

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